Activision Blizzard is to buy King for $5.9bn (£3.8bn), in a deal that has probably made the Candy Crush maker’s management and shareholders feel like they found a cheat to beat the boss at the end of a particularly hard level.
King’s sweet-toothed suitor, which makes World of Warcraft and Call of Duty, the most successful console game ever, has agreed to pay $18 per share in cash. That’s a 20% premium above King’s closing price on Friday, but below the $22.50 it floated at on the New York Stock Exchange in March last year.
It’s a pretty sweet deal. King has struggled to branch out from its free mobile game Candy Crush, which brings in almost 40% of its revenues. Those revenues have been falling - down 18% year-on-year to $490m in the second quarter of this year – as have profits and the all-important monthly active users.
Investors certainly savoured the news: King’s shares were up more than 14% to $17.77 in after-hours trading (although Activision’s sank a little more than 1%).
For Activision, which has a market capitalisation of more than $25bn, it’s a way into the mobile gaming market. The California-based company is still largely reliant on the Playstation and Xbox; ‘mobile and other’ made up just 5% of its $1bn second quarter revenues, the same percentage as last year despite rising 13% in absolute terms.
Some may mourn the takeover of London-based, Dublin-headquartered King as another sign Europe can’t grow tech giants to rival Silicon Valley’s. But King may well have struggled to survive, or at least grow and thrive, on its own for much longer. Let’s just hope Activision hasn’t bitten off more than it can chew.